The Madras High Court in its recent ruling in the case of United Processors has held that the transfer of goods involved in works contract would amount to ‘sale’ and the entire turnover will be assessable is tax.
Facts of the case:
- The Respondent Authority had re-assessed the liability of the tax in connection with the use of chemicals in printing works for the assessment years under the Tamil Nadu General Sales Tax Act, 1959 in respect of the Petitioner, who had received the copies of those orders.
- The Petitioner, United Processors was entitled to prefer appeal against those orders under Section 31 of TNGST Act, within a period of 30 days from the date of their receipt before the Appellate Authority, who has been empowered to condone delay in filing such appeal for an extended period of 30 days, if sufficient cause for not preferring appeal within that period is made out.
- However, the Petitioner did not prefer any such appeal before the Appellate Authority, but has instead filed the Writ Petitions challenging the orders passed by the Respondent beyond the maximum limitation period of 60 days from the date of receipt of copy of those orders.
- Learned Counsel for the Petitioner persistently ventilated the grievance that the impugned orders are without jurisdiction inasmuch as the re-assessment has not been completed within the time limit of five years from the date of order of the final assessment made by the assessing authority stipulated in Section 16 of the TNGST Act
Order of Madras High Court : Deliberation and Ruling
- The proposition canvassed by the Learned Counsel for the Petitioner, which is in blatant contravention of the authoritative pronouncements holding the field, cannot be countenanced.
- The Division Bench of this Court in State of Tamilnadu -vs- Tex-in-Printers (Order dated 04.10.2013 in Tax Case (Revision) No. 49 of 2009) has reiterated that after introduction of Section 3-B and the amendment made to the definition of ‘sale’ in Section 2(n)(ii) of the TNGST Act, the transfer of goods involved in works contract would amount to ‘sale’ and the entire turnover has become assessable to tax and that the same view has been expressed by another Division Bench of this Court in State of TamilNadu -vs- Tvl. Tamil Nadu Co-operative Textile Processing Mills Limited W.P. Nos. 26427 to 26429 of 2018 (Order dated 25.06.2019 in Tax Case No. 2319 of 2008), meaning thereby that the Petitioner cannot have any grievance for the re-assessment of tax liability based on that settled question of law.
In view of above deliberations the Coram consisting of Justice P.D. Audikesavalu held that these Writ Petitions, which lack merits, are dismissed. Consequently, the connected Miscellaneous Petition were also closed.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
